Market Commentary: Staying the Course on Climate Change Policy - Though It’s Losing Some Steam

We tend to see issues through our biased lenses as Americans and conservatives, moderates, or liberals. Climate change is one such issue that has generated much debate about its consequences and potential remedies. The U.S. has taken a markedly different approach under the Trump administration, promoting the production of fossil fuels (coal, natural gas, and oil) and nuclear power, while rolling back subsidies for renewable energy (wind and solar). Europe, however, is still very much in the clean energy camp—albeit begrudgingly acknowledging the continued need for fossil fuels, at least in the intermediate future.

There is consensus that the step change in electricity demand will require more energy that must be reliable, available, affordable, and cleaner. One size does not fit all. Most companies we speak with remain steadfast on their decarbonization goals, and we do not see that changing.

While government administrations come and go, energy companies must continue to invest in projects that generate strong returns and are not overly reliant on government subsidies. What the government giveth, the government can taketh away. 

IN OUR VIEW:  Investors will be well served over the long term by allocating a portion of their equity portfolios to energy, recognizing the long runway of growth tied to global electrification, population growth, and the lifting of indigenous regions out of energy poverty. At SAM Partners we continue to see a bright future for companies participating in the natural gas value chain (including natural gas liquids), utilities, and selectively in clean energy.

TRUMP ENDS WAR ON FOSSIL FUELS IN THE U.S.

The Trump administration has been committed to “unleashing American energy,” primarily through climate, environmental, and energy-related deregulation, incentivizing U.S. production of fossil fuels, and rolling back climate initiatives and resources. Key changes that have been announced to date include:

• Withdrawal from the Paris Agreement (January 2025). This is also the first year that the U.S. did not send a delegate to the COP conference.

  
  

• Expansion of federal areas for leasing and drilling. President Trump declared a national energy emergency in February 2025. Directives were implemented to reverse prior withdrawals of Outer Continental Shelf areas from oil and gas leasing. Notably, the Arctic National Wildlife Refuge (ANWR) and National Petroleum Reserve-Alaska (NPR-A) oil & gas leasing plans were finalized in November 2025. Trump is also proposing to expand offshore drilling to federal waters in the Atlantic and Pacific oceans.

• Promotion of fossil fuel production—including coal and nuclear—while eliminating incentives for renewables. For example, One Big Beautiful Bill Act reduced tax incentives for wind and solar while imposing timing limitations.

• Streamlining of environmental and climate regulations. In March 2025, the EPA announced the "biggest deregulatory action in U.S. history," addressing issues such as carbon emissions from power plants, methane emissions from oil and gas companies, lower federal fuel economy standards for vehicles, repealing the Clean Water Rule.

  
  

• Elimination of energy infrastructure barriers. In January, Trump issued an order to resume processing permits for LNG export projects. The administration has also been supportive of the development of natural gas pipelines (e.g., The Williams Companies’ Northeast Supply Enhancement (NESE) and Constitution Pipeline projects).

FIRESIDE CHAT | 11.10

We hosted a fireside chat on November 10^th with Chad J. Zamarin (President and CEO) of The Williams Companies, Inc. (NYSE:WMB) (watch replay of webinar). Our conversation covered the macro-outlook for natural gas, the company's multi-billion-dollar backlog of natural gas pipeline projects, its LNG partnership with Woodside Energy, and its behind-the-meter natural gas generation projects to serve data centers. Spoiler alert: WMB is well positioned to surpass its five-year annualized EBITDA and EPS growth rates of 9% and 14% in the next five years.

IEA RETREATS ON FOSSIL FUELS AND SEES LONGER RUNWAY FOR OIL AND NATURAL GAS

Early this month, the International Energy Agency (IEA) released its flagship World Energy Outlook (WEO) report that explores a range of possible energy scenarios. Given the geopolitical backdrop, the IEA notes that “countries are prioritizing energy security and affordability.” It also highlights that “there is less momentum than before behind national and international efforts to reduce emissions, yet climate risks are rising.” The WEO explores three main scenarios:

1.      The Current Policies Scenario (CPS) reflects policies and regulations that are already in place

2.      The Stated Policies Scenario (STEPS) projects the future of the energy system based on current and announced policies

3.      The Net Zero Emissions (NZE) by 2050 Scenario assumes that specific energy and climate-related goals are attained

KEY TAKEAWAYS:

• Oil and gas demand will not peak until 2050 given current trends. In previous reports, the IEA had assumed that fossil fuel consumption would peak this decade. In the Current Policies Scenario, demand for oil and natural gas continue to grow to 2050, although coal starts to fall back before the end of this current decade.

Demand for Coal, Oil, and Gas by IEA Scenario

• The Age of Electricity is here. The IEA expects electricity demand will grow much faster than overall energy demand. The increase approximates 40% to 2035 in both the CPS and the STEPS, and by more than 50% in the NZE Scenario. Solar PV and wind remain the fastest growing source of electricity generation over the next decade.

• Clean energy continues to grow. In all scenarios, renewables (led by solar photovoltaics) grow faster than any other major energy source. However, in the STEPS, U.S. renewables growth slows meaningfully due to Trump-era policy changes (resulting in ~30% less installed renewables capacity in 2035 vs. last year's Outlook).

COP30: UNABLE TO DEFEAT FOSSIL FUELS

The Conference of the Parties (COP) is the largest global UN event for discussions and negotiations on climate change. The meeting is held annually, with the presidency rotating among the five UN-recognized regions. The 30th annual Conference of the Parties (COP30) was held in Belém, Brazil from November 10–21. More than 56,000 delegates signed up to attend the meeting in person, making it one of the largest summits in COP history. Our overall take on the conference was that the spirit of international climate cooperation is still alive, but the absence of U.S. representation was clearly felt. Leaders voiced disappointment that the execution on emission reductions and financial commitments has faltered. The biggest source of frustration for some was that delegates were unable to reach an agreement on transitioning away from fossil fuels. The fight goes on.

KEY TAKEAWAYS:

• "The hard truth is that we have failed to ensure we remain below 1.5 degrees." United Nations (UN) Secretary-General António Guterres called for implementation, not negotiations, to limit the overshoot of the Paris Agreement’s 1.5°C warming threshold. Clearly the focus has shifted from “if” to “when and by how much” we end up above this threshold. The new nationally determined contributions (NDCs) “have limited effect on narrowing the emissions gap by 2030 and 2035, leaving global warming projections well above the Paris Agreement’s temperature goal” as highlighted in UNEP’s “Emissions Gap Report 2025: Off Target.”

• Climate finance gap remains. Another key focus of the summit was the operationalization of the Baku Finance Goal to raise at least $1.3 trillion of climate financing for developing nations by 2035. The UN presented its “Baku to Belém Roadmap to 1.3T” which outlines five action fronts to achieve the $1.3T goal (as detailed in the chart below). While the roadmap is a positive development towards implementation, we note that the climate finance gap remains enormous with only roughly $300 billion agreed to currently.

Five Action Fronts Aimed at Scaling Up Climate Finance to Developing Countries

Source: UN REPORT ON THE BAKU TO BELÉM ROADMAP TO 1.3T – November 2025

• The EU's Carbon Border Adjustment Mechanism (CBAM) faces pushback. India, China and other countries view the tariff as a trade barrier while the EU argues it as a climate measure. Imports of carbon intensive goods (e.g., steel, cement) will be subject to tariffs starting on 1/1/26.

• A bright spot: climate and health funding. The Climate and Health Funders Coalition— comprised of more than 35 philanthropies [including the Gates Foundation]—committed $300 million to help countries strengthen health systems against climate-related risks. The funding in support of the Belém Health Action Plan recognizes climate change as not only an environmental crisis, but a health one as well.

OCTOBER REVIEW: ENERGY DIPS ON COMMODITY PRICE OUTLOOK

The rundown:

• In October, SAM’s Infrastructure Income Portfolio produced a return (net of fees) of -3.5% compared to 2.3% for the S&P 500 and -1.0% for its customized benchmark. The underperformance relative to benchmark reflect our lower weights in the utilities and clean energy sectors. Year-to-date, SAM’s Infrastructure Income Portfolio produced a return (net of fees) of 0.7% compared to 17.5% for the S&P 500 and 14.6% for its customized benchmark.

• In October, SAM’s Energy Transition Portfolio generated a return (net of fees) of -0.8% versus 4.1% for its customized benchmark. Year-to-date, SAM’s Energy Transition Portfolio generated a return (net of fees) of 3.5% versus 29.8% for its customized benchmark.

• SAM’s portfolios are more heavily weighted in Midstream, which underperformed relative to the clean energy and utilities sectors in October and these sectors year-to-date.

• Midstream underperformed the overall market and was down in October and year-to-date with a total return of -6.4% and -0.4%, respectively, as measured by the AMNAX.

• In October, the clean energy sector outperformed the overall market, generating a total return of 11.9% as measured by the S&P Global Clean Energy Index (SPGTCLTR). For the month, utilities also outperformed with a total return of 2.5% as measured by the Philadelphia Stock Exchange Utility Index (XUTY). Year-to-date, SPGTCLTR and XUTY generated total returns of 53.7% and 20.6%, respectively.

• Sector performance in the S&P 500 was largely positive with six out of eleven sectors posting positive performance. Information Technology was the best performer and Materials was the worst. Energy delivered a -1.1% monthly total return. October month-end WTI crude oil and Henry Hub natural gas prices were $61.75 Bbl and $3.57 per MMBtu, down ~-2% and up ~14%, respectively from last month.

RESULTS: SINCE INCEPTION & ONE YEAR

SAM’s Infrastructure Income Portfolio produced a return (net of fees) of 131.9% and 9.6% for the periods since 11/10/20 inception and 1-year, respectively. This compares to a total return of 127.8% and 13.7%, respectively, for its customized benchmark and 107.7% and 21.5%, respectively, for the S&P 500 as of 10/31/25.

SAM’s Energy Transition Portfolio generated a return (net of fees) of 28.0% and 11.3% for the periods since 4/29/21 inception and 1-year, respectively. This compares to a total return of 36.5% and 21.9%, respectively, for its customized benchmark and 73.6% and 121.5%, respectively, for the S&P 500 as of 10/31/25.

2025 Year-to-Date Total Return as of 10/31/25

Source: Bloomberg, NASDAQ and S&P Global

Sam Partners’ Infrastructure Income and Energy Transition Strategies seek to provide sustainable income and growth with capital preservation. This is accomplished by investing in a concentrated portfolio of high-quality midstream energy companies, utilities and clean energy companies that are well positioned to participate in the energy transition to a net zero carbon future. A diversified approach to investments across these sectors should optimize risk-adjusted returns, in our view. Our Infrastructure Income Strategy offers investors a current yield of ~4.5% and growth potential of ~5-7%; while the Energy Transition Strategy that is more heavily weighted with clean energy stocks and aligns with favorable ESG ratings, offers investors a current yield of ~3.5%. In a world searching for yield, we believe these Strategies offer a compelling value proposition.

IMPORTANT DISCLOSURES

Siegel Asset Management Partners is a registered investment advisor located in Plainview, New York. The views expressed are those of Siegel Asset Management Partners and are not intended as investment advice or recommendation. This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. Information is obtained from sources deemed reliable, but there is no representation or warranty as to its accuracy, completeness, or reliability. All information is current as of the date of this material and is subject to change without notice. Third-party economic, market or security estimates or forecasts discussed herein may or may not be realized and no opinion or representation is being given regarding such estimates or forecasts. Certain products and services may not be available in all jurisdictions or to all client types. Unless otherwise indicated, Siegel Asset Management Partners' returns reflect reinvestment of dividends and distributions. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.